INTERIM REPORT - The Link REIT

REPORT OF THE CHIEF EXECUTIVE OFFICER (CONTINUED)First Acquisition – Nan Fung PlazaOn 9 June 2011, the Manager announced the acquisition by The Link REIT of the commercial portionof Nan Fung Plaza from the Nan Fung group of companies for HK$1,170 million. The acquisition isthe first one for The Link REIT since its initial public offering in 2005, and the first venture into retailproperties in a private residential development. The acquisition is expected to enhance distributionyield of The Link REIT and capitalise on the synergy value when the operations of Hau Tak ShoppingCentre are combined with those of Nan Fung Plaza. This marks a new milestone in The Link REIT’sbusiness development and paved the way for further growth opportunities.Nan Fung Plaza is located adjacent to the Hang Hau mass transit railway station in the TseungKwan O district in the New Territories. It is connected by footbridges to The Link REIT’s Hau TakShopping Centre in Hang Hau. The Manager believes that the addition of Nan Fung Plaza allows usto better leverage on the Manager’s expertise in retail property management to bring more businessopportunities for the tenants and provide a better shopping environment for the shoppers in thearea.Nan Fung Plaza has been successfully integrated into The Link REIT’s portfolio of assets followingcompletion of the acquisition on 11 July 2011. The Manager is focusing on strategies to improvetrade mix and has integrated this newly acquired property into the portfolio’s marketing plans.New tenants and services will be introduced to Nan Fung Plaza including a bakery shop andthe installation of an automatic teller machine. Rental reversion rate and occupancy have beenencouraging since completion, which demonstrates our capability in asset management.Performance of Nan Fung PlazaAs at 30 September 2011Occupancy rate 98.4%ValuationHK$1,183 millionAverage monthly unit rent an increase of 3.7% since acquisition completed (1)Note:(1)Based on end July 2011 and end September 2011 figures.Car Park PortfolioRevenue from car parks accounted for 19.7% of total revenue for the six months ended 30September 2011 (six months ended 30 September 2010: 19.5%). In the six months under review,rental income from car parks grew 11.6% year-on-year to HK$569 million (six months ended 30September 2010: HK$510 million). The implementation of various incentive parking schemes andthe closure of some neighbourhood car parks have further stimulated parking demand among ourportfolio. The car park operating margin was 59.8% for the six months under review (six monthsended 30 September 2010: 57.5%) which excluded the write-back of the waiver fees provision as thefinal waiver fees assessed by the government were lower than our original estimation.22The Link Real Estate Investment Trust